Dr. Sherri Wise Makes the First Canadian Claim under the Justice for Victims of Terrorism Act

On 11 October 2013, the Ontario Court of Appeal granted intervener status to Dr. Sherri Wise in a case on whether an American court judgment against Iran should be recognized under our domestic Justice for Victims of Terrorism Act [JVTA]. Dr. Wise is a victim of terrorism. She was severely injured in a 1997 Hamas bombing in Israel. In March 2012, Parliament opened the door to suits against state sponsors of terrorism for damages sustained in a terrorist attack by passing the JVTA.

Dr. Wise is the first Canadian to make a claim under the JVTA. She is making a claim against Iran for that country’s financial and military support of Hamas. However, her prospects of recovery would be significantly diminished if the American judgment were recognized. The American judgment is also against Iran, and it resulted in a damages award of $13 M. Since this quantum of damages exceeds the assets that Iran presently has in Canada, Dr. Wise would be left with nothing if the American judgment were recognized. Granting Dr. Wise intervener status sets the stage for a legal battle that will determine the parameters for using the JVTA to satisfy potentially conflicting foreign and domestic judgments.

Making State Sponsors of Terrorism Pay Up

The JVTA allows victims of terrorism to sue state sponsors of terrorism for damage that occurred as a result of terrorism committed anywhere in the world. Section 4(1)(a) of the JVTA specifies that only those states that are listed as state sponsors or terrorism can be sued. On 7 September 2012, the Canadian government announced that both Iran and Syria would be listed as states that sponsor terrorism.

Section 4(5) of the JVTA allows the court to recognize judgments in foreign courts for damages against listed state sponsors of terrorism, as long as equivalent criteria of the JVTA are met in the foreign laws that lead to those judgments.

An American Judgment Outflanks a Canadian Claim

The American judgment at issue is Bennett v Islamic Republic of Iran, 618 F.3d 19 (2010) [Bennett]. In 2002, a teacher named Marla Bennett was killed in a Hezbollah bombing of a cafeteria at the Hebrew University in Jerusalem. Her parents brought a suit against Iran and the Iranian Ministry of Intelligence and Security (MOIS) for damages from the attack because they provided material support and assistance to Hezbollah.

The Bennetts’ cause of action arose out of § 1605(a)(7) of the American Foreign Sovereign Immunities Act, which provides for a “state-sponsored terrorism” exception to a foreign state’s default immunity to suits for damages brought in American courts. The Bennetts used this provision to successfully obtain a $13 M damages award.

The issue in this case centers on the Bennetts’ application under section 4(5) of the JVTA to have this award recognized in Canada. The problem is that the Department of Foreign Affairs has only identified around $2.6 M worth of Iranian state assets in Canada. This means that recognition of the American award would preclude any potential recovery for Canadians making applications under the JVTA.

This is why Dr. Wise sought to intervene in the Bennett case. In 1997, Hamas suicide bombers severally injured Dr. Wise in an attack in Israel, where she was volunteering at a dental clinic. In September, Dr. Wise became the first Canadian to make use of the new JVTA when she filed a notice of claim in the British Columbia Supreme Court.

One Pot, Two Hands

But Dr. Wise’s claim will be moot if the Bennett judgment exhausts Iran’s financial resources in Canada. In September, Dr. Wise made a motion, under Rule 13.01(1) of the Ontario Rules of Civil Procedure in the Ontario Superior Court of Justice, for leave to intervene as an intervener in the Bennett case.

The motions judge dismissed her motion on the grounds that Dr. Wise had not met any of the three criteria enumerated in Rule 13.01(1): (a) she did not have an interest matter in the subject of the proceeding; (b) she did not demonstrate that she may be adversely affected by a judgment in the proceeding, and; (c) she could not demonstrate that there exists between herself and one or more parties to the proceeding a question of law or fact in common with one or more of the questions in issue in the proceeding.

The motions judge alternatively held that Dr. Wise would not provide any “value added” to the hearing that would offset the delay that this would introduce into the proceedings.

Dr. Wise, Intervener

The Ontario Court of Appeal overturned the motion judge’s decision. The court noted that a person needs to satisfy only one of the criteria under Rule 13.01(1) in order to be able to move for leave to intervene. The court held that Dr. Wise satisfied two criteria by demonstrating that she has a contingent interest in the subject matter of the proceeding and that she may be adversely affected by a judgment recognizing the American judgment: “The appellant provided evidence from the Canadian government suggesting that Iran’s assets in Canada may not be sufficient to satisfy any judgment other than the respondents.”

The court decided to not grant the motion judge’s decision deference because it mischaracterized the nature of the case as a private commercial conflict between a judgment creditor and a contingent debtor. The Bennetts are not judgment creditors because they have not yet succeeded in having their American judgment recognized in Canada, so their “interest is more akin to the contingent interest of the appellant.”

The court also noted that, in contrast to the motion judge’s private characterization, the case actually involves issues of public importance:

The JVTA is new legislation, enacted with the important public objective of impairing the functioning of terrorist groups. Its interpretation is a matter of first instance. No other party seeks to make the arguments that the appellant advances…

Dr. Wise argues that the Bennetts are barred from having their American judgment recognized in Canada because their application under the JVTA fell outside the limitation period. The court expressed concern in this case that this argument may not be made if Dr. Wise is not granted intervener status, and that there would be no avenue for appeal even if it is made but dismissed by the motions judge.

Limited Presence, Limited Recovery?

This case will be the first test of the JVTA. The Bennetts’ attempt to have their American judgment recognized and Dr. Wise’s challenge to this highlights a curious tension within the JVTA: the room the statute gives to recognize foreign judgments could ultimately deprive Canadian victims of terrorism of any meaningful financial recovery.

The Bennetts’ attempt to claim Iranian assets in Canada is perfectly understandable given Iran’s lack of significant assets in the United States. However, only so many hands can fit into the small pot of recovery offered by Iran’s limited North American presence. The court’s judicial discretion will certainly be tested when this case resumes on 31 October.